Tax Effort, Environmental Difference and the Extractive Capacity of the Local Government: An Empirical Study Based on China

This paper applies the four-stage DEA in the empirical research on the extractive capacity of the local governments of 26 provinces in mainland China, in order to create a benchmark environment to gain the result of assessment of provincial government. Moreover, it makes a quantitive analysis on the environmental elements, which could influence the extractive capacity of local government. The analysis proves that the efficiency of fiscal extraction tends to be higher in regions where the levels of economic development are higher and the tax resources are more abundant. The paper also indicates that the influences that industrial structure exerts on the efficiency of fiscal extraction of local governments are prominent, and the contributions the tertiary industry makes to the efficiency of fiscal extraction of local governments are far less than the contributions the secondary industry makes. Concerning the administrative organs, the paper proves that the huge, overstaffed structure of tax administrative organs would lead to the low efficiency of fiscal extraction of local government.